TANZANIA – Tanzania Breweries Limited (TBL), a subsidiary of AB InBev has announced a 5% decrease in revenue to Tz1.02tri (US$439.9m) for the year ending December 31, 2019 from Tz1.07tri (US$461.5m) recorded in 2018, as it discontinued traditional beer business run by its affiliate Darbrew Ltd.
Darbrew Ltd manufactures affordable drinks like Chibuku whose once-high popularity appears to have declined sharply, leading to TBL’s decision to scale down production.
The decline in revenue was in tandem with the decline in the gross profit by 3% despite the decrease in the cost of sales by 6% to Tz628.29bn (US$270.9) from Tz669.3bn (US$288.6m) in the year ended 2018.
The decrease in cost of sales and other expenses led to the company registering a 5% increase in operating profit to Tz220.07bn (US$94.9m) in the year ended 2019 compared to Tz210.33bn (US$90.7m) in the corresponding period.
Selling and distribution cost decreased by 7% to Tz118.69bn (US$51.1m) from Tz128.16bn (US&55.2m), the administrative expenses declined 8% to Tz50.25bn (US$21.6m) compared to Tz54.70bn (US$23.5m) in the other year.
The company report shows further expenses falling by 53% to reach Tz7.62bn (US$3.2m) from Tz16.27bn (US$7m).
The company had announced plans to start a new brewery plant in Dodoma in 2019, but construction is yet to take off.
TBL incurred Tz64. 17bn (US$27.6m) as capital expenditure during the year in expansion and improvement of existing production facilities.
Return on assets (ROA) and return on equity (ROE) also recorded an increase to 19 per cent and 39 per cent respectively compared to prior year.
Although the effects of Covid-19 on beer and alcoholic beverage sales have not been quantified, most bars and other selling points around the country have reported a decline in business as a direct result of the crisis.
Future revenues may also be hurt by a new alcohol control law passed by Zanzibar House of Representatives this week seeking to limit the scale of importation, storage, sale, distribution and consumption of alcohol in the Isles, including imposing 25 as the age limit for people to sell or consume alcohol.